Yahoo's FareChase: The Stealth Disruptor?

Although FareChase is web giant Yahoo's travel contender, it's nonetheless a relatively small player in the online travel search space. Now that FareChase is out of beta, though, the service could very quickly become a strong presence and dramatically transform online travel search.

When I think of travel search (often referred to as travel meta search) I think of SideStep, Kayak, and Mobissimo. FareChase is a distant fourth in the small, but potentially disruptive space.

Online travel agents (OTAs) vs. travel search engines

We all know Expedia, Travelocity, and Orbitz. These companies are OTAs and are the dominant players in the industry. How dominant? According to Expedia's Q4 2005 conference call, "75% of U.S. travel shoppers online visit one of [Expedia's” sites prior to making a purchase."

Think of OTAs as Travel 1.0. These companies took the traditional travel agency business and moved it online. You can call up any of the OTAs and book a flight, change a departure time, or plan a vacation. A traveling Gnome might even make sure a hotel honors your reservation. While the OTAs might charge you fees for some or all services, you get peace of mind and a guarantee that someone has covered your back.

From the travel supplier perspective (airlines, hotels, car rental companies, etc.), OTAs are a friend you love to hate. After 9/11 and the SARS epidemic, the OTAs provided a valuable distribution channel for distressed travel suppliers.

Fast forward to today, though, and the travel suppliers would much rather have people book directly through their own sites versus through an OTA where they have to pay high fees and give up "ownership" of the customer. Because of this, a number of key travel suppliers like JetBlue and InterContinental Hotels do not list inventory through the OTAs.

Travel search engines will never run a call center. Travel search engines will never have a traveling Gnome to guarantee a trip is satisfactory. Travel search engines use technology to help consumers book a flight, hotel, or car as quickly and efficiently as possible. Through SideStep, Kayak, Mobissimo, and FareChase, a consumer can search about a hundred suppliers for the best travel option and then click through to the travel supplier to book. In simple terms, there's no real hand holding with travel search engines. These companies are basically lead generation services.

From the travel supplier perspective, the travel search engines represent a small, but potentially important distribution channel. Now that many of the airlines and hoteliers have invested in their own websites and back-end technology, they can provide the travel engines with almost real time inventory information. The travel search engines, in turn, send consumers directly to the travel supplier's site for booking which means that JetBlue, for instance, doesn't have to pay extra fees to an OTA and JetBlue has the chance to develop a strong relationship with the traveler.

If you're booking an international family vacation to a not-so-well known location, an OTA will probably be your best bet. You want help. If you're booking a quick trip to San Francisco for Ad:Tech, though, a travel search engine might be a better option.

Why FareChase matters

So if you have the dominant OTAs and a number of travel search engines already fighting for the consumer's attention, why does FareChase matter? Truthfully, before late last year, I didn't think it mattered at all. FareChase was a quality service, but it was not promoted by Yahoo

And then, in a bold move by Yahoo, it created a FareChase tab on the Yahoo Travel home page. This was an important step for the travel search engines. The booking engine on Yahoo Travel is powered by Travelocity. While I'm not privy to the details of the Yahoo/Travelocity relationship, I'm sure it's a lucrative partnership for both parties. Furthermore, Travelocity spends a lot of money advertising on Yahoo Search Marketing. So for Yahoo to present its users with an alternative option is a big deal.

Now that FareChase is out of beta, Yahoo has made an even bolder move and integrated FareChase into Yahoo Search results. Yahoo's hundreds of millions of users can now see FareChase booking information when they type travel related terms such as "jamaica flight" or "compare las vegas hotel" into Yahoo. The FareChase results are above the fold as with all Yahoo Shortcuts. Google has a similar implementation, but Google links to OTAs, not travel search engines.

Because of this new integration, the very small travel search market will potentially get a big boost and become the disruptive technology it's been heralded as for years. With more traffic, travel suppliers might migrate spending to the travel search engines and away from other distribution channels. If this happens, Expedia and Travelocity might be forced to play nice with the travel search engines which they have, up to now, referred to as insignificant competition. The one exception is Orbitz, the only major OTA which has partnered with the travel search engines.

Important FareChase features and functionality

All the travel search engines have the same basic flight search functionality—sorting, filtering, amenities, etc. The power of FareChase comes from the integration of hotel search with other Yahoo properties.

Maps

Searching for Hotels on FareChase returns the basic hotel listings but also returns a map with the exact locations so you can see if your beach front hotel is actually on the beach - you can switch to satellite view just to be extra sure. Even better, you can click on "Restaurants" or "Attractions" to find out what's close to your hotel before you book.

The map stays with you as you scroll down the page so you don't have to repeatedly scroll up and down. With all the buzz about maps, this is a great differentiator for FareChase and will probably force the other travel search engines to implement a similar offering. Kayak launched a mapping option recently in conjunction with Google Maps, but Kayak does not allow you to add local restaurants or attractions to the map.

Trip Planner Beta

Incorporated in FareChase's hotel search is a link to associated "Trip plans." Clicking on the link opens up a new window featuring trips created by the Yahoo community through Trip Planner Beta. With Trip Planner, you have the ability to create your personal trip itinerary, add restaurants and entertainment options, map everything, and keep a photo journal of your adventure. You can browse through other people's trips and add any of the items from their trip to your trip. Think of Trip Planner as your personal Frommer's Travel Guide.

Reviews

The travel search engines have been slow to add reviews. Leveraging the Yahoo network, though, FareChase has a wealth of Hotel reviews and articles. Just as FareChase lists "Trip plans" next to each hotel, the site also lists associated user ratings and reviews. Clicking on the 'Reviews' button opens up a new page with detailed Yahoo user reviews. My contact at Yahoo pitched me that these ratings and reviews are essential as everyone looks at reviews before checking out a new restaurant or buying a plasma screen TV. Booking a hotel room is no different. In other words, I didn't need the pitch as adding hotel ratings and reviews is a no-brainer.